Southern California -- this just in

Schwarzenegger won't sign tax relief for homeowners

March 15, 2010 | 3:29
pm

Gov. Arnold Schwarzenegger announced today that he would not sign a bill lawmakers passed to bring new tax relief to homeowners and green energy companies, in large part because it would ramp up the penalties against those who abuse such tax credits.

The governor’s move came at the urging of a coalition that includes the California Chamber of Commerce, the Western States Petroleum Assn. and the California Manufacturers and Technology Assn. It lobbied against the bill, SBX8 32, arguing that it would make businesses reluctant to claim tax breaks for fear of making an error.

The governor’s announcement puts in jeopardy tax breaks targeted at Californians who lose their homes in short sales and businesses in the state’s burgeoning green tech sector. Administration officials urged lawmakers to immediately get back to work crafting a new proposal and to pass it in time for Californians to be able to claim the credits on their 2009 returns, due April 15. But Democrats said it is unlikely a new bill would get enough votes, leaving taxpayers out of luck.

The governor’s announcement set off a fresh round of bickering Monday at the Capitol. Administration officials said the penalties against tax cheats, which would apply only to the wealthy and corporations, were inserted at the last minute even though it was already well established that the governor would not support them. "They are trying to leverage us," administration spokesman Aaron McLear said of Democrats. He said the Democrats assumed the governor would approve the new penalties if the alternative were no relief for homeowners and green tech. But the penalties "are just not something we will support," McLear said.